FTSE 100, DAX 40 and Dow are taking a breather
Outlook on FTSE 100, DAX 40 and Dow after higher-than-expected UK CPI data and ahead of further US Q3 earnings such as Tesla, IBM and Procter & Gamble.
FTSE 100 softer on higher-than-expected UK inflation
The FTSE 100 is seen giving back some of its recent gains, as UK consumer price inflation (CPI) comes in at a higher-than-expected 10.1% year-on-year (YoY) and core inflation – excluding food and energy – at 6.5% versus an expected 6.3% in September with month-on-month (MoM) inflation running at 0.6%.
A slip back to Tuesday’s low, the 13 October high and the breached two-month downtrend line at 6,922 to 6,906 may thus be witnessed. Below this area support can be spotted at the 6,783 early October low.
Minor resistance can be found at the psychological 7,000 mark. A rise above Tuesday’s high at 7,018 would target the early September low and the early October high at 7,104 to 7,131.
DAX 40 gives back some of its recent gains amid profit-taking
The DAX 40’s near 8% rally from last week’s low is taking a breather around the 55-day simple moving average (SMA) at 12,904 ahead of Thursday’s September German Producer Price Index (PPI) data which is expected to come in at 1.5% month-on-month and 7.9% year-on-year.
It is normal for equity indices to consolidate in the short-term after a fast and strong rally such as the one seen since last week.
Slips should find support around the 12,704 early October high. Further support comes in at the early September trough at 12,596.
A rise above this morning’s overnight session high at 12,948 would engage the August-to-October resistance line and early September high at 13,026 to 13,057.
Further up the late August high can be spotted at 13,376 and the September peak at 13,570.
Dow Jones Industrial Average
The Dow Jones Industrial Average (Dow) is grappling with the August-to-October downtrend line, having attempted to break through it on Tuesday.
The index is seen losing short-term upside momentum below Tuesday’s 30,838 high as traders await Q3 earnings from the likes of Tesla, IBM and Procter & Gamble on Wednesday.
The 5 October high at 30,457 may be revisited in the meantime but may act as support. Further support can be found at the 30,132 mid-July low.
Were a rise to above Tuesday’s high at 30,838 to materialise, the 55-day SMA at 31,364 would be in focus.
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